Theory of Bitcoin: The Bitcoin Whitepaper ‘Proof of Work and the Network’ key takeaways

Economic competition and incentives are at the heart of the Bitcoin system he invented, a system that is completely different than the system that falls under the BTC ticker symbol.

The point here is that once POW has been performed, the block is complete and cannot be undone without redoing the work.

For a node to find a block, complete it and signal its completion to the network, it shows they are serious and invested in what they are doing.

Wright explains that it’s impossible to take action against them if there is fraud and therefore you can’t trust anything.

In order for the system to work, we need to know who the nodes are so we can hold them accountable.

And if you can say this guy with 30% of the hash power has now double spent or done something wrong, you can attribute that to them,” Dr.

With Bitcoin, if 51% of the network attacks, you would know what miners represent the 51% of the network.

Wright discuss how there are people that say there should be POW with a continuous equal block reward forever and just have it as a constant inflation rate.

In addition to scaling and growing the network, the incentives are there to make it irrational for nodes to be anything other than honest.

Wright is incredibly well-versed in the study of criminality and economic incentives and he explains that economic criminals are more rational than the average person.

Wright, economic criminals take morality out of the equation and do not care what’s right or wrong, they care “purely from a utility-based outcome.” Since criminals are rational, if you set everything up for them so they know they are going to lose money if they don’t follow the rules, then you don’t need to worry.

A possible scenario could be that transaction fees go up peak time and users will have to pay more for transactions to go through quickly.

Wright explains that as the network scales and it becomes more difficult to send a block around as they will be so big, transacting will be broken down into peak times and low times and the fees will change accordingly, similar to how electricity is billed.

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